Median house price nears $1.1 million in capital cities


Home prices across much of the country rebounded last year to the point that they have now eclipsed the all-time highs recorded when the market last peaked in early 2022, the latest quarterly House Price Report from Domain has revealed.

Throughout 2023 the median price of a house jumped 7.8% across the capital cities to a new record $1,094,539, while median unit prices rose 6.8% to a record $638,372.

Price growth in regional areas was more subdued though, with house prices up 3.5% to $585,765 over the year and units up 3.4% to $449,662.

median house prices capital cities

Dr Nicola Powell, Domain's chief of research and economics, says that many of the pre-2023 predictions of another flat year for the property market ended up missing the mark as price growth in many areas surprised on the upside.

"While stretched affordability, cost of living pressures and high-interest rates were expected to put a lid on property prices in 2023, the undersupply of new homes, cost-to-build blowouts, a growing population and a tight rental market continued to boost housing demand.

"This led to new record prices for combined capital houses and units by the end of 2023, which broke the previous records that we saw in March 2022 for houses and December 2021 for units."

Which property markets recorded the largest rises?

Zooming in, Adelaide lead house price growth across the capital cities with a 12.7% increase during 2023, while unit prices rose even faster at 13.2%.

The sharp jump in prices has become the norm in the City of Churches since the pandemic period which, according to Domain, is a trend which has been fueled by the city's tight rental market and lack of housing supply.

The one positive for would-be buyers in Adelaide is that the rate of price growth for both types of housing is starting to slow.

Elsewhere, Brisbane was the only city to record a steeper rise in the median price of a unit than Adelaide throughout 2023 (14.2%), but the annual growth rate for house prices was slightly lower at 9.7%.

House prices in Perth (11.9%) and Sydney (10.6%) also shot up over the year to new record levels, though unit prices in both cities recorded lower rates of growth. Meanwhile, Melbourne was more subdued, notching modest house and unit price increases.

Prices in Canberra, Darwin and Hobart slump

Despite strong price growth in the majority of Australia's capital cities, the trend didn't play out across the board.

Canberra recorded the largest drop of all the capitals when it came to houses, with prices falling 4.6% over the year. In fact, the median house price in the nation's capital has been falling for six quarters and is now more than $150,000 lower than its June 2022 peak.

It was a different story altogether for unit prices in Canberra though which rose 10.2% - the third highest rate of growth among the capital cities.

The was also a modest fall in the median house price and a slight gain in the median unit price in Hobart, while Darwin was the only capital to see price declines in both types of property.

Will property prices go up in 2024?        

With 2023 rapidly retreating in the rearview mirror prospective buyers and sellers will both be turning their attention to the price forecasts and property market trends expected in 2024.

In November last year SQM Research predicted that the average national dwelling price would shift in the range of -1% to 3% in 2024, with prices likely to rise most in Perth and Brisbane and fall furthest in Canberra and Hobart.

Broadly, Domain's outlook is more optimistic on the price rise front. However, one unknown factor Powell highlights is the impact interest rates will continue to have on the borrowing capacity of buyers.

"What the latest data is telling us is that the prices are still rising, but the pace of growth is slower than what it was in the early stage of the recovery. This pace is driven by new stock coming into the market, easing the competition, but not enough to halt price growth," she says.

"Looking ahead to the rest of the year - in the shorter term, high interest rates will continue to exert stress on mortgage affordability and limit borrowing capacity.

"With an interest rate cut tipped to happen in the latter half of the year, we are expecting to see an increasing demand that will likely drive upward price pressures on the housing market."

Interested in a more comprehensive dive into the factors likely to shape the property market in 2024, along with the standout locations across the country for property investors?

Pick up a copy of the February 2024 issue of Money magazine to find out our top 50 property and share buys, on sale from February 2.  

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Tom Watson is a senior journalist at Money magazine, and one of the hosts of the Friends With Money podcast. He's previously worked as a journalist covering everything from property and consumer banking to financial technology. Tom has a Bachelor of Communication (Journalism) from the University of Technology, Sydney.